Newpark Resources, Inc. (NYSE:NR) Q4 2023 Earnings Call Transcript

Newpark Resources, Inc. (NYSE:NR) Q4 2023 Earnings Call Transcript February 22, 2024

Newpark Resources, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good morning. My name is Savannah, and I will be your conference operator today. At this time, I would like to welcome everyone to the Newpark Resources Fourth Quarter and Full Year 2023 Earnings Conference Call. This call is recorded and will be available for replay beginning at 12:30 p.m. Eastern. The recording can be accessed by dialing 800-925-9394 domestic or 402-220-5386 International. All lines are currently muted and after the prepared remarks, there will be a live question-and-answer session. [Operator Instruction] It is now my pleasure to turn the floor over to Gregg Piontek, Senior Vice President and Chief Financial Officer. Please go ahead.

Gregg Piontek: Thank you, operator. I’d like to welcome everyone to the Newpark Resources fourth quarter 2023 conference call. Joining me today is Matthew Lanigan, our President and Chief Executive Officer. Before handing over to Matthew, I’d like to highlight that today’s discussion contains forward-looking statements regarding future business and financial expectations. Actual results may differ significantly from those projected in today’s forward-looking statements due to various risks and uncertainties, including the risks described in our periodic reports filed with the SEC. Except as required by law, we undertake no obligation to update our forward-looking statements. Our comments on today’s call may also include certain non-GAAP financial measures.

Additional details and reconciliations to the most directly comparable GAAP financial measures are included in our quarterly earnings release, which can be found on our corporate website. There will be a replay of today’s call, and it will be available by webcast within the Investor Relations section of our website at newpark.com. Please note that the information disclosed on today’s call is current as of February 22, 2024. At the conclusion of our prepared remarks, we will open the line for questions. And with that, I would like to turn the call over to our President and CEO, Matthew Lanigan.

Matthew Lanigan: Thank you, Gregg, and welcome to everyone joining us on today’s call. I’m pleased to share that the Newpark team continued to execute at a high level in the fourth quarter, maintaining our focus on operational excellence while also advancing our multiyear business transformation strategy. We entered 2023 with very clear priorities: first, a focus on operational efficiencies to drive improvements in returns and consistent free cash flow generation; second, prioritizing investment in the growth of our Industrial Solutions business while evaluating strategic alternatives for our Fluids business; and finally, maintaining a strong balance sheet and returning excess cash generation to our shareholders. I’m pleased to say that in 2023, we delivered on all 3.

Our Industrial Solutions business delivered 12% year-on-year growth in rental and service revenues, which included solid improvements across all major industry sectors, resulting in a 21% increase in segment operating income and a 13% increase in adjusted EBITDA. We continue to strengthen our position within the key utilities transmission market, which is forecasted to grow robustly over the next three years, with an average of more than $30 billion per year projected to be spent annually on transmission line projects, according to recent EEI survey of asset owners. For the full year 2023, within our Fluids business, our divestitures and restructuring actions, along with disciplined balance sheet management and the strong performance of our international businesses contributed to a 15% year-over-year improvement in adjusted EBITDA and a $69 million reduction in the segment’s net working capital resulting in the segment’s strongest return on net assets since 2018.

Notably, our Eastern Hemisphere delivered 28% year-over-year growth, to a record $257 million of revenues in 2023, while our Canada operations also delivered 12% year-over-year revenue growth. As a result, Newpark delivered $74 million of free cash flow in 2023. We increased our rental fleet by 11% and continued to prioritize capital to the expansion of our rental and service footprint to serve the multibillion-dollar infrastructure markets. We also launched a process to divest our Fluids business and have been working diligently to move that forward. And finally, we reduced our net debt by $54 million and returned $32 million to shareholders through the repurchase of 6.5 million shares. Across the board for full year 2023, we executed against our stated priorities and set the business up for a solid 2024.

Turning now to specifics of the fourth quarter. We generated adjusted net income of $4 million or $0.04 per diluted share on revenues of $168 million. Within Industrial Solutions, while rental revenues remained in line with Q3 levels, late-quarter customer project timing shifts due to non-matting-related supply chain and local permitting issues impacted expected Q4 direct sales deliveries. Combined with reduced service activities, this led to a 19% sequential decline in segment revenues. The segment delivered $17 million of fourth quarter adjusted EBITDA, reflecting a 36% adjusted EBITDA margin, again, highlighting the business’ flexibility to maintain strong margins and returns despite mix shifts in revenue sources across quarters. As mentioned in my full year comments, despite quarterly fluctuations, we remain encouraged with the longer-term outlook in our served markets and our ability to continue to penetrate them.

Consistent with our Q3 commentary, the Fluid Systems business revenues declined 14% sequentially, primarily reflecting the anticipated pullback in the EMEA and U.S. regions. On the lower revenues, the segment delivered $5 million of adjusted EBITDA and a 4% adjusted EBITDA margin. Importantly, our Fluids team’s disciplined focus on working capital management led to a $25 million fourth quarter reduction in the segment’s net working capital, which ended the year at $171 million. With the meaningful reduction in Fluids’s working capital, we generated $28 million of free cash flow in the fourth quarter, which provided for a $13 million reduction of debt and a $6 million return of capital to shareholders through continued repurchases of our equity in the open market.

We also invested $9 million of CapEx, primarily reflecting late quarter additions to our rental fleet to support our expanding rental project pipeline. We finished the year with net debt of $36 million and a 0.5x net leverage ratio. And with that, I’ll turn the call over to Gregg for his prepared remarks.

Gregg Piontek: Thanks, Matthew. I’ll begin my remarks with the summary of our consolidated and segment level results for the fourth quarter, followed by an update on our outlook for 2024. Our fourth quarter was highlighted by strong cash flow generation, which provided for further expansion of our rental fleet, debt reduction and return of capital to shareholders. Total fourth quarter revenues were generally in line with our expectations shared on our previous quarterly call with stronger-than-expected customer activities in international Fluids markets, offsetting lower revenues from U.S. Fluids and lower Industrial Solutions product sales. The Industrial Solutions segment revenue was $46 million in the fourth quarter, with more than 75% coming from rental and service.

Rental and service revenues were $36 million for the fourth quarter, an 11% year-over-year decline. As we highlighted on our November call, customer activity in early Q4 was impacted by more pronounced hot and dry weather conditions, but we saw a steady improvement throughout the quarter and ended the year with much stronger rental utilization. This is a very different dynamic than we faced in the prior year, as the fourth quarter of 2022 was exceptionally robust, benefiting from strength in utility infrastructure project activity combined with the benefit of favorable weather conditions, which drove rental fleet utilization above typical levels. Direct sales, which tend to fluctuate based on timing of customer projects, declined $7 million year-over-year to $11 million for the fourth quarter as multiple customer project delays shifted the timing of expected sales into 2024.

Further, the historical pattern of elevated Q4 purchases from utility customers didn’t manifest this year as these customers utilized the remaining capital budgets to fulfill other needs. On a full year basis, rental and service revenues have increased 12%, reflecting growth across all major sectors, while product sales were down slightly. Industrial Solutions segment profitability remained strong in the fourth quarter as reflected by the segment adjusted EBITDA margin of 36%. The Fluid Systems segment generated revenue of $121 million in the fourth quarter, representing a decline of 28% versus the prior year period, with a $44 million decline in U.S. land and $20 million impact from last year’s divestitures, partially offset by an $18 million increase from international operations.

Our Eastern Hemisphere contributed $63 million or 52% of our total Fluid Systems revenues in Q4. The fourth quarter result reflects a sequential decline from the record Q3 results, primarily driven by the anticipated reductions in the Congo and several European markets, somewhat offset by the restart of activity in Cypress and an increase in the APAC region. On a year-over-year basis, our Eastern Hemisphere revenues improved 19%. Revenues from Canada increased 21% sequentially to $21 million in the fourth quarter, which reflects a 74% year-over-year improvement. Our U.S. operations contributed $37 million of revenue in the fourth quarter. Excluding the divestitures, this reflects a 26% sequential and 54% year-over-year decline. The sequential decline was primarily driven by the continued softening in the U.S. market activity, as well as a notable decline in the average revenue contribution from the rig service.

With the effects of the U.S. market softness, we are maintaining our focus on pricing discipline and balance sheet efficiency, resulting in strong cash from U.S. operations. Segment adjusted EBITDA margin was 3.9% in the fourth quarter. As Matthew touched on, we reduced our net working capital in the Fluid Systems business by $25 million in the fourth quarter, including a $14 million reduction in the U.S., reflecting the solid progress driving working capital efficiency. As of the end of the year, the Fluid Systems business has $171 million of net working capital, consisting primarily of receivables and inventory, which represents more than 80% of the segment’s net assets employed. SG&A expenses were $23.3 million in the fourth quarter of 2023, including $6 million of corporate office expense.

The decreases in SG&A and corporate office spending on both a sequential and year-over-year basis is primarily driven by the impacts of short-term and long-term performance-based incentive programs. Interest expense decreased modestly on a sequential basis to $1.9 million for the fourth quarter, reflecting the effect of the lower overall debt balances. Tax expense was $2.4 million in the fourth quarter as we were not able to recognize a tax benefit from the $3.5 million of impairment charges. The effective tax rate was 39% year-to-date. Adjusted EPS was $0.04 per diluted share in the fourth quarter, compared to $0.07 in the fourth quarter of last year, reflecting the effects of lower profitability, partially offset by a 7% decline in our diluted shares outstanding.

Operating cash flow was $36 million for the fourth quarter, while $8 million was used to fund our net CapEx, with the majority once again directed for the expansion of our Industrial Solutions rental fleet. We also used $13 million to reduce debt and $6 million to fund share repurchases. As a result of stronger-than-anticipated international receivable collections near the end of the year, our cash balance increased $10 million in the fourth quarter. We generated $28 million of free cash flow in the fourth quarter, bringing our full year free cash flow to $74 million, a 93% full year cash conversion of adjusted EBITDA. Let’s now turn to the business outlook. Our view on the respective markets and the opportunity remains largely unchanged. For Industrial Solutions, we continue to see strong fundamentals for utility and critical infrastructure spending, which we expect will provide a multiyear tailwind to support our growth plan.

In terms of our Q1 outlook, we expect modest sequential growth in rental and service revenues. And while we are pleased with the robust pipeline of opportunities on product sales, the timing of customer projects remains dependent upon permitting, supply chain and other factors. For the full year 2024, we anticipate total Industrial Solutions revenues in the $230 million to $240 million range and Industrial Solutions adjusted EBITDA of $80 million to $85 million, with segment CapEx of $30 million to $35 million. In Fluid Systems, while the U.S. market outlook remains somewhat challenged in the near term, our Eastern Hemisphere and Canada business units, which contributed roughly 70% of the segment’s revenue in Q4, continued to perform at a high level.

Overall, we expect Fluid Systems revenue to improve modestly on a sequential basis in the first quarter, with international growth somewhat offset by continued U.S. softness. At this revenue level, we expect segment adjusted EBITDA margins to improve toward the mid-single digits, benefiting from international operations. We anticipate corporate office expense will remain fairly in line with our 2023 exit rate for the foreseeable future, as we continue to advance the strategic process for the Fluids segment. Meanwhile, we expect interest expense and tax rates to remain fairly in line with current levels until we conclude the Fluids process. In terms of capital allocations, we expect our 2024 net capital investments will remain dependent upon our projected rental revenue growth rate.

Beyond our continued organic growth investments in Industrial Solutions, we expect our 2024 cash generation will be primarily used to build liquidity for inorganic growth opportunities following the Fluids divestiture or return of capital to shareholders through our programmatic share repurchase program. And with that, I’d like to turn the call back over to Matthew for his concluding remarks.

Matthew Lanigan: Thanks, Gregg. As we leave 2023 and look ahead to 2024, I’m pleased with the progress we’ve made to drive organic commercial growth across the enterprise while continuing to build a more efficient, competitive business. Industrial Solutions once again delivered year-over-year growth in revenue, EBITDA and margin realization. With our ongoing expansion in the multibillion-dollar global worksite access market, we remain optimistic about the longer-term prospects for our business. In Fluid Systems, our international operations continued to deliver significant year-over-year growth in revenue and profitability, offsetting declines in U.S. land markets, with the total Fluids segment delivering the highest return on net assets since 2018.

I remain proud of our global Fluids business as they continue to navigate the changing global landscape, streamlining U.S. operations and overhead structures while enhancing support capabilities within strategic international markets and maintaining a laser focus on safety, exemplary customer service and working capital efficiency. Our priorities for 2024 are clear. Within our Industrial Solutions business, we’re prioritizing geographic expansion within the U.S. across a higher-growth regional footprint, utilizing our unique position as a vertically integrated manufacturer of composite matting to expand our fleet and drive share gains within our existing markets. We will continue to manage to our return and margin targets, carefully balancing our pricing and fleet utilization as we evolve our project mix towards larger, longer duration projects that provides for more stable revenues, but more competitive pricing dynamics.

We will also continue to expand the usage of alternative and recycled materials in our raw materials mix, further cementing our circular plastics credentials and optimizing manufacturing costs without impacting quality, appearance or design capability of our products. While volume growth within this business isn’t linear, given factors of permitting and project timing, we remain bullish on the multiyear demand outlook, given the pace of new investment within our energy and infrastructure markets and specifically within the utility transmission market, considering the growth in spend in this space that I referred to in my opening comments. As we expand our already meaningful relationships across the country with asset owners and their construction partners, we believe this will provide strong long-term growth and a reduction in quarter-to-quarter volume swings, such as we experienced in the fourth quarter.

We believe our matting portfolio includes the most flexible, lightweight and durable solution in the market, positioning us to win where we compete. As it pertains to our Fluid Systems business, our strategic review remains on track. Given the scope of our international Fluids operations, diligence is time-intensive. However, we’re making good progress with our partners at Lazard to move the process forward and continue to anticipate it will be concluded around mid-2024. Finally, with respect to capital allocation, we continue to optimize our balance sheet while investing in the expansion of our matting fleet and service capabilities. As we move closer towards becoming a pure-play industrial solutions business, we see the opportunity to become a strategic acquirer of assets within our existing scope of capabilities, evaluating adjacent markets that enhance our unique value proposition with customers while supporting a path towards incremental margin expansion over time.

In closing, I want to thank our shareholders for their ongoing support, our employees for their dedication to the business, including their commitment to safety and compliance and our customers for their ongoing partnerships. And with that, we’ll open the call for questions.

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Q&A Session

Operator: [Operator Instructions] And our first question will come from Aaron Spychalla with Craig-Hallum. Please go ahead.

Aaron Spychalla: First for me, on the Industrial business, I know we had a tough comp year-over-year with weather, but could you give a little more details on some of the project push-outs? Sounds like it was supply chain, permitting. Was that broad-based or just a handful of projects? Have those started in the first quarter? And then maybe just discuss how the pipeline sits today compared to the past few quarters as we think about growth for 2024?

Matthew Lanigan: Yes. Thanks, Aaron. On the Q4 shift, it was really two specific projects at the end of the day. One was related primarily to steel products not being available for the full scope of the project, which caused them to push that. As it stands to its timing, it looks like the utility moved on to other projects and are now planning that for a little later in this year. So, it has not yet commenced. The other project was related to a local permitting issue that caused that delay. And that permitting issue is also still not resolved. So not necessarily what I’d call a systemic issue, related to two specific projects in this case. As it pertains to pipeline, if we look at where we are on a quoted volume this time this year versus last, we’re seeing sort of strong mid- to high teens growth in our quote rates, which is really underpinning the confidence that we referred to in the call.

Aaron Spychalla: And then, I appreciate the margin guidance for the year, looks right around the mid-30s, but it’s down slightly a little bit year-over-year. Can you just talk about how you’re thinking about price versus volume and mix in 2024, especially with lumber prices where they are? And maybe how recycling factors into that as that starts to grow as a percentage of your mix?

Gregg Piontek: Yes. I’ll start, and then I’ll have Matthew add to it. But I think the growth that we see in 2024, that was going to be much more so driven by volume expansion as we penetrate the market. As Matthew mentioned in his comments, we are intentionally pursuing some of these longer-duration projects, which obviously come at a different price point. You’re kind of trading utilization and predictability for a little bit of price. I wouldn’t expect price to be a big movement there, probably kind of gradually reduce as we progress through the year and make that progression to longer-term projects.

Matthew Lanigan: Yes. I think you got it.

Aaron Spychalla: And then just maybe one more, I know you didn’t guide for Fluids explicitly as you have in the past. But just with the decline in the fourth quarter relative to the past few quarters, are there any other less profitable areas that we need to still step away from? Just want to understand a little more on what drive — drove the 4Q performance and how we should be thinking about that business from here?

Gregg Piontek: No major changes in the overall business makeup or business changes in the way. Obviously, we’re in the midst of the process. And so continuing to do kind of the — taking the common sense actions to streamline the overall organization and really adjust to that mix shift. But as we kind of framed up, this thing has shifted pretty dramatically over the past year, with now 70% of our revenue is here coming from the international piece of the business. So, I think that as we look in the near term, I don’t see any major changes in that. You continue to have the market dynamics of — international is where we see the greatest strength in the U.S. market continues to be struggling as a general market as a whole.

Operator: Our next question will come from Amit Dayal with H.C. Wainright. Please go ahead.

Amit Dayal: On the Industrial outlook, is that you supported by some concrete backlog? Or are we just sort of using our pipeline to give that outlook?

Matthew Lanigan: Yes. It’s really pipeline driven. I think in this business, backlog is a harder concept for us. We just look at what our quoted volumes are with various start times throughout the year. They typically tend to be more here and now type project activities that we are actively quoting on in the pipeline. So it’s really just looking at pipeline volume changes year-over-year and period-over-period, which as I sort of said to Aaron, we’re looking at high teens sort of growth in our quoted volumes and a fairly stable conversion rate on those, which is which is driving the forward guidance.

Gregg Piontek: Yes. And just adding to that, just as we saw in Q4, even when you do have firm orders and locked-in projects, we find that the timing of those projects starts slide because they are dependent on some other things that are beyond our control.

Matthew Lanigan: Yes. And I mean the interesting thing there is about a year ago, they slid in our favor, and we had a really strong Q4 with all these things lining up in the quarter this year. This year, it appears that, that couldn’t be repeated. So it’s — there are swings and roundabouts.

Amit Dayal: And the CapEx that’s going on into the Industrial segment, is that mainly going to support the rental business or some other projects?

Matthew Lanigan: Yes. Primarily, it’s supporting fleet expansion. There are some maintenance CapEx needs at the plant, but the primary focus is on rental fleet expansion as we look back — look to grow those geographic regions forward and continue to penetrate new customers in the space.

Gregg Piontek: Yes. And in rough round numbers, roughly 75% of our CapEx here this year was really driven by that — supporting that growth of that rental fleet. So as we look forward, that — the growth rate in the rental fleet is going to be kind of the key driver of our level of CapEx in the business.

Amit Dayal: And then on the fluids business, it seems — I mean Lazard is still working on potentially getting some interest. I mean, should we assume that there is no sort of formal bids on the business yet?

Gregg Piontek: Yes. Without getting into too many details on exactly where the process is, we’ve followed what I’d frame up as a typical marketing process, as we had mentioned previously. That process launched in September, and then you go through your Phase I, Phase II diligence, as Matthew mentioned in his comments, as he can kind of naturally expect when you look at the international complexities and the breadth of the operations, the diligence phase takes a reasonable amount of time. But having said that, we’re still seeing kind of the midyear ’24 expectation to get the process substantially wrapped.

Operator: And our next question will come from Bill Dezellem with Tieton Capital. Please go ahead.

Bill Dezellem: You had mentioned that in 2023, that 75% of your CapEx was from — or directed towards rental fleet expansion. Do you anticipate that same ratio this year?

Gregg Piontek: I would not expect any major changes in that. Yes. I think you still have at least 75% or so of our CapEx will be in the form of fleet expansion.

Bill Dezellem: And directionally, what geographic regions are you looking to expand in?

Matthew Lanigan: Yes, Bill, we really — we see some nice growth in sort of the Midwest and Northwest markets are opening up, as well as a lot of continued activity within our — the more traditional markets in the Southeast and Southwest. But in terms of new activity, I think really it’s a Midwest focus.

Bill Dezellem: And then once you have accomplished what you’re referencing in the Midwest and the Northwest parts of the country, would you still be under-penetrated in?

Matthew Lanigan: Yes, I don’t know I’d describe it as under-penetrated. I think it’s really just — we can move fleet fairly efficiently and we can move crews fairly efficiently. What we want to do is, as we see sustained activity levels set up, set up more permanent establishments there. It’s really going to be a case of using our logistics efficiency to service those project-specific areas versus a sustained level of activity in the geographic area. Another way to say that is, we cover the country now that as we look at where we want to have more established presences for what we see as more sustained activity longer term that they are the areas where we’re looking to move fleet to.

Bill Dezellem: Understood. So, there aren’t any areas in the country that you are just out — not in at this point or at least once you get into the Northwest and Midwest?

Matthew Lanigan: That’s right.

Bill Dezellem: And if I just think about a map of the United States, the Northwest and the Midwest encompass a really large geographic area. How does that relate to the size of revenue possibility? Does geography equal revenue with these at transmission lines? Or is it really more tied to population basis?

Matthew Lanigan: Yes, it’s really — I mean, it’s really more tied to what activity is going on in those spaces in terms of renewable tie-in. Is a renewable project tie-ins — is it just infrastructure upgrades? Is it interstate connections, what the activity levels are to support the — kind of the supply goals of the utilities in those geographies. Typically, higher populations, higher demand. That would drive that kind of thing, but I think it’s more generally related to what’s actually going on in those markets from an alternative supply and then a reliability perspective.

Gregg Piontek: Yes. I think you do have some issues, some geographies that have more of an issue with aging of their infrastructure, so therefore, a need for them to harden the grid, et cetera.

Bill Dezellem: So what geographies are in need of grid hardening the most? And then second, is our perception correct that the renewables, specifically wind and solar, are most active in terms of new installations in the Midwest there, basically from the Mississippi west?

Matthew Lanigan: Yes. Bill, I think, on a project basis, the call out of the focus in that Midwest area is where we see the activity levels really supporting our push into that space as it pertains to project activities, specifically around the renewable tie-ins and et cetera. I think as you’ve called out the geographies and where you see those projects, that’s where we’re going to be.

Bill Dezellem: And the grid hardening, where is that most needed?

Matthew Lanigan: I think as you’ve seen, as we move through the Southeast and the Southwest regions where you’ve got more exposure to extreme weather events, particularly in the form of hurricanes and things of that nature. But generally, as Gregg touched on it, I think the grid across the country is kind of at the outer edge of its age limit. So there’s a full-court press here to upgrade that to meet the reliability standards and the capacity requirements that the society needs.

Bill Dezellem: And then one more, a totally different direction here. Would you please detail what you hinted at relative to the quote rate increase for the mat business and provide us more perspective on that, please.

Matthew Lanigan: Sure. I mean as we look at our quoting activity, which we’re capturing in our systems, and we see the level of that from a volume perspective of what’s out there in the marketplace, we look year-on-year, and we see that at a point in time this year, the volume of quotes that we’ve been asked to participate in is up in that sort of 15% to 19% year-over-year, which gives us confidence that the longer-term demand in the activity levels are lining up with the macro themes you’re hearing in terms of utilities, expanding CapEx budgets and talking about the need to upgrade their infrastructure. We’re seeing that flow through into project requests. What we have kind of alluded to in the call is, be it supply chain specific or permitting specific, the timing of those is becoming less easy to predict. So hopefully, that covered what you’re after Bill.

Operator: And next, we have a follow-up from Aaron Spychalla with Craig-Hallum. Please go ahead.

Aaron Spychalla: Yes. Just a couple of others for me. On the free cash flow, can you just maybe talk about how you see that trending in 2024, some of the moving pieces there? I mean, you had a really strong year in 2023 from working capital benefits. Just how does that look as we head into 2024?

Gregg Piontek: Yes. The working capital benefit we saw in ’23 — that provided a pretty significant tailwind, and that’s really the — overall revenue driven. As I look to 2024, what I would say is the fundamental model, you still see strong free cash flow generation. The one thing that would work as a headwind to that is, if you do have a very sharp growth rate in the revenues, that would actually — that would consume working capital and work against you. But absent that, we see a solid free cash flow generation for the year. Q1, I would say, I would expect that to be somewhat muted in part because we had a very strong Q4. Q1, you also have certain impact of, like, payout of your annual incentive. So that kind of works against you as well. So I would expect kind of a muted free cash flow generation here in Q1, but solid for the year.

Aaron Spychalla: Got it. And then just maybe one last one. On the 800 Series launch, just maybe an update on the progress there. How has uptake been given the performance benefits? And just is that something that kind of helps accelerate growth given kind of the value proposition there?

Matthew Lanigan: Yes, Aaron, on the 800 Series, we have deployed the majority of that product into our internal fleet. So, we’re seeing the transportation advantages from the lighter weight in our own internal fleet use. And so, really, that’s what we wanted to do to kind of put that product to work in our own fleet first and then look to expand that to customers into this year and beyond. So I’d say it’s all going on track. The performance of the product as we predicted and expected is performing like a traditional DURA-BASE product with just that weight advantage that’s really helping on the transportation side.

Operator: That will conclude our time for the question-and-answer session. I would now like to turn the conference back to Mr. Gregg Piontek for any closing remarks.

Gregg Piontek: Thank you. That concludes our call today. Should you have any questions, please reach out to us using our e-mail at investors@newpark.com, and we look forward to speaking with you again next quarter.

Operator: And that will conclude today’s conference. Thank you for your participation and you may now disconnect.